Apple has officially announced they will be acquiring Beats Electronics for $3 billion. The deal is split $2.6 billion in cash and $400 million in stock and should close sometime in the next few months, unless Apple runs into roadblocks.
The acquisition has been rumored for a few weeks, ever since news broke that Apple were considering a $3.2 billion deal. It looks like the $200 million has been shaved off the deal since we first heard about it, but this is still Apple’s biggest acquisition to date.
Nobody is 100 percent sure what Apple is gunning for, it appears the MOG streaming service, recently renamed Beats Music, is the main factor in the deal, although an audio hardware brand might not be the worst thing for Apple to acquire.
Apple’s CEO Tim Cook stressed they would have been able to make what Beats makes in a matter of months, but its all about bringing the talent and culture into Apple, similar to the other 29 acquisitions the company has made.
Beats Music would be a good brand for Apple to pick up for music streaming, considering Spotify and other services are taking a significant chunk out of iTunes profits, that have been falling ever since the rise of music streaming services in the late 2000’s.
Apple might also look towards adding Beats Audio onto the iPhone and other hardware lines, considering their own speaker system isn’t great. Beats could also work on Apple’s first party headphones and offer more variety in that area.
Audio is definitely a market that has a questionable price tag, Beats has really made a case for audio brands being worth something, but they are a lone warrior where brands like Sennheiser, Bose and Pioneer audio business would go for around $100 million.
We look forward to seeing what Apple does with the Beats brand and how they can further the music streaming service.
